If Tom and Di Specialize in Producing the Goods in Which

question 185

Multiple Choice

If Tom and Di specialize in producing the goods in which he and she have a comparative advantage and they exchange goods, then

• A) each will produce a combination of goods that is within her/his production possibility frontier.
• B) they will lose because they are no longer able to produce and consume both goods.
• C) each will gain because each can consume a combination of goods that is outside her/his production possibility frontier.
• D) one of them will gain and the other will lose.

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